Centre set to raise Rs 89,000 cr in first-half

The Centre today announced its borrowing programme to raise up to Rs 89,000 crore in the first half of the financial year 2006-07. Of this, Rs 18,000 crore is to be mopped up through stock auctions in the first month of the next financial year.

The stocks will have a tenure of 20 years and the fund will be raised in two tranches, worth Rs 3,000 crore and Rs 4,000 crore.

Apart from this, the Centre aims to raise up to Rs 5,000 crore through 10-14 year and Rs 6,000 crore via 5-9 year stocks.

The first half borrowing in the next fiscal is slightly higher compared with Rs 83,000 crore raised during the same period in 2005-06.

In order to enable both institutional as well as retail investors to plan their investment in a more orderly fashion and to make the gilt market more transparent and stable, the Centre has released an indicative calendar for issuance of securities.

According to the auction calendar, the government's plan is to raise up to Rs 28,000 crore, via issuance of securities having tenure in the range of 10-14 years and up to 20 years. It aims to raise up to Rs 15,000 crore through 15-19 year stock and Rs 18,000 crore through 5-9 year stock.

Of this, the Centre plans to raise an average of Rs 15,000 crore each in May, June and July through auction of stocks having a tenure of 15-19 years.

In August and September, the government's target is to raise Rs 17,000 crore and Rs 9,000 crore, respectively.

The RBI has announced that all the auctions will be under the non-competitive bidding scheme. Under this scheme, as much as five per cent of the notified amount will be reserved for specified retail investors.

Depending upon the market requirement, variable rate bonds could account for about 10 to 15 per cent of the total issuance, the RBI said.

The apex bank has also lowered the annual ceiling on the stock float under the market stabilisation scheme to Rs 70,000 crore for 2006-07. In 2005-06, the ceiling was Rs 80,000 crore.

The threshold level at which the ceiling will be reviewed in 2006-07 has been fixed at Rs 60,000 crore. Currently, the level of outstanding balances under MSS issuances stands at Rs 30,000 crore.